Increase Taxes to Create Jobs

We have a problem to solve. If you aren't aware, American Corporations just had their best year ever this year. That's right, while we are underemployed, the big players have set themselves up for a tidy 1.69 Trillion Dollars in profit. Depending on who you ask, the unemployment rate hit a low of 3.6% at the end of Clinton's presidency, hovered between 4 and 6% under most of Bush, and leaped to 10.6% under Obama at the worst. Now it's at 9.3%, but it's relevant to note that last month it was at 9%. Heading into the holiday retail rush, unemployment still rose. Graph

So how can this be? We have the best year ever for corps yet we have this highest unemployment rates in my lifetime. Wages to employ the middle class male hasn't moved in my 36 years of life (page 36 of this PDF). So how is it that a company can go from employing people, to losing them, to becoming profitable again yet not looking to employ people back at the same level? I'm suggesting that there is a tax incentive not to.

Corporations are ran by people whom make a very good living. Great news for them. They are also legally obligated to make the most money possible for their share holders. If you have a company that is being taxed at a low level, being ran by someone taxed at a low level (16% was the rate at which the highest earners were taxed on average) whom doesn't have to pay the income tax on services used while working (private jet, lavish dinners, Hotels, vacations) why would they rather hire someone? If they spend more on themselves, they can keep more of their own money and pay themselves in stock which gets taxed as Capital Gains at 15%.

Almost three-quarters of the highest earners’ income was in capital gains and dividends taxed at a 15 percent rate set as part of Bush-backed tax cuts in 2003 Link

An example... if you owned a corporation, or a dozen, and you had a 35 million dollar mansion with plenty of space, but you faced a tax burden, what would prevent you from purchasing another 15 million dollar home next door as your office? Thanks for the write off!

So we've reached a point where we have taxed too little. There is no incentive to hire people over spending the money on yourself. We have to go back and raise taxes on corporations in terms of closing loop holes. We have to raise the taxes on the wealthy because the income disparity has spun out of control in the last 30 years. Even in an economy like this, the rich have found a way to get a hold of our money directly in bailouts. Indirectly in write offs for their Bombadier Challengers. And indirectly by choosing to not hire people, but instead spend on themselves. This is a problem with a 30 year history to look at. Even with Bush tax cuts that supply-siders like claim increases revenues, didn't work. It was five years before revenues went up, hardly relate-able to the tax cut.

Raise taxes in a way that doesn't incentivize job growth at a cost to the people, but increase them in a way that it's a lose lose for the corporations if they don't hire. That million dollar remodel of the office, you can write off $15,000 of it and you are paying the rest on income tax. And if you try to skate, we're taking you and the CFO to jail. Spend a million on salaries and you can write the whole thing off. That's how you incentivize business properly.

Tell the rich that since you get all of your income from Capital Gains, that's now a progressive tax just like income. You have to go back 94 years to find tax rates as low as they are today. Our system of making sure that the rich have a pile of cash in hopes that we'll catch a nickel isn't working. Not for the people, the government, or even effective business.

Many of the rich get it. We have 371 Billionaires in the US. 57 of them are on the Giving Pledge. Stop with the claims that we get more jobs by taxing less. Stop with the claims of more revenues on less taxes. It's all bull.

So how would you raise taxes to create more jobs? I know that there are tons of ways. Let's brainstorm some areas that get abused that need to be addressed.

Replies to This Discussion

On a note of the value of taxation and the rhetoric from the right, a friend of mine posted a tough challenge to defend his claims about needing low taxes at all times. He asked for one example in the last 2000 years of a country moving to a centrally planned economy and increasing taxes and being prosperous in doing so. Challenge accepted and I responded.

One example of a nation that hiked taxes and moved to a centralized planning model... Czech Republic after the invasion by the Soviets in 68. "In the late 1960s and early 1970s, the Czechoslovak economy continued to grow at a respectable rate throughout the period." mid 6% to upper 5% rates. Wiki -http://en.wikipedia.org/wiki/Economy_of_Communist_Czechoslovakia

On Taxation, "With Effect from July 1968, tax rates on incomes of tax payers who support more than one child (plus one dependent) have been increased to the level of basic rates." Page 181 of Wage, price and taxation policy in Czechoslovakia 1948 - 1970. On Google books but the link is long!

You gotta love it when they throw out a claim that makes you dig back into a closed communist country to prove, yet you can still do it. Sorry, Communism actually was economically good for Czech for the first decade or so. More taxes, means more money, and a better economy... Me no Compute!

Thanks doone. I sometimes wonder if I've fallen off the turnip truck and get caught up in the emotional argument. It would appear that those more educated on the subject than I don't disagree with my position.

David Stockman, Regan's Office of Management and Budget director, says that the GOP has destroyed our economy and has set us up for class warfare. Not the symbolic kind either. Link

There is a point where we'll have had enough. You can't invest wisely anymore because hedgefunds and banks have supercomputers investing for seconds at a time. As a result companies like Microsoft make record profits but the stock falls and no dividends are paid. It's parasitic in nature and is bankrupting unions and pensions all over, but that only affects the poor and that's a great way to bust the unions.

Houses down the road from me are being sold at 60 cents on the dollar compared to five years ago just so that the banks can get rid of the tied up capital. As a result, I've paid over 100,000 on a mortgage, and lost 100,000. Effectively today, it's cost me 200,000 dollars just to keep a roof over my head for the last five years.

I started a business 4 years ago. I had saved up 50k and staked it on my talents. I got to work and worked my way up to pushing 20k a month, then my insurance went up by 105% in one year 17k to 36K. Then the banks stopped lending. We gave them money to lend, they just gave it out in bonuses and sat on the rest. I can no longer come up with the 30k for insurance next year and I'm sunk.

I've tried to do everything right. My wife's degree, paid for before it was in hand. I have no debt outside of the house and it is a 30 year fixed only 2/3 of what they offered me in a mortgage. Last car purchased, paid off in 2 years. We don't waste. But I can't make money in the market due to unscrupulous, but legal, investors. I can't make money in real estate because the lenders wanted you to take bad loans on houses that you couldn't afford. I can't make money in business because my specialty has been decimated for two years. Even if I had 100% of the market, I couldn't pay the insurance and no joke, only Evanston can provide my Errors and Omissions. It's a national monopoly. Not even Lloyds will touch it. There is a break point where the warfare begins. I can only imagine that the smallest of push would get the 20% unemployed for 99 weeks or more there. Who's minding the store? If you take away the facade of the American dream that appeases us, and all bets are off. I'll be fine, but I worry about those whom have ran out of hope or a light at the end of the tunnel.